This booklet is intended to provide useful information to assist businesses in
Canada taxation and new harmonized sales tax (HST) in British Columbia, and does not replace federal or provincial legislation and accompanying regulations. It is strictly intended for reference purposes. As it may not completely address your particular operation, you may wish to consult the appropriate legislation or contact: Canada Revenue Agency at 1-800-959-5525 or www.cra-arc.gc.ca B.C. Ministry of Finance at 1-877-388-4440 or www.gov.bc.ca/fin/ 2
British Columbia Tax Guide Tax Rates B.C. personal income tax rates apply to specific tax brackets. A tax bracket is a range of annual income. Income past a certain point is taxed at a higher rate. The tax brackets are indexed each year to the Consumer Price Index for B.C. (BC CPI). For the 2014 tax year, the tax brackets were increased from the previous year by a BC CPI rate of 0.1%. Note: For the 2014 and 2015 tax years, there is a temporary tax rate and tax bracket of 16.8% on taxable income over $150,000. Personal Income Tax Brackets and Rates - 2014 Tax Year
Taxable Income - 2014 Brackets Tax Rate $0 to $37,606 5.06% $37,606.01 to $75,213 7.70% $75,213.01 to $86,354 10.50% $86,354.01 to $104,858 12.29% $104,858.01 to $150,000 14.70% Over $150,000 16.80% Tax rates are applied on a cumulative basis. For example, if your taxable income is more than $37,606, the first $37,606 of taxable income is taxed at 5.06%, the next $37,607 of taxable income is taxed at 7.70%, the next $11,141 is taxed at 10.5%, the next $18,504 of taxable income is taxed at 12.29%, the next $45,142 of taxable income is taxed at 14.70% and any taxable income over $150,000 is taxed at 16.80%. Personal Income Tax Brackets and Rates - 2013 Tax Year
Taxable Income - 2013 Brackets Tax Rate $0 to $37,568 5.06% $37,568.01 to $75,138 7.70% $75,138.01 to $86,268 10.50% $86,268.01 to $104,754 12.29% Over $104,754 14.70% 3
Basic Tax Credits You can reduce the amount of B.C. personal income tax you owe with basic tax credits. However, if the total of these credits is more than the amount you owe, you will not get a refund of the difference. These are called non-refundable credits. B.C. basic tax credits are calculated by multiplying the base amount by the lowest rate in effect for the year. For the current income tax brackets and rates, see our Tax Rates page. Personal Credit Changes When the Harmonized Sales Tax (HST) was implemented in 2010, the basic personal, spousal, and eligible dependant credit amounts were increased. The credit amounts were increased to offset the additional taxes paid because the HST applied to more goods and services than the Provincial Sales Tax (PST). The basic personal, spousal, and eligible dependant credit amounts were reduced after the province returned to PST in 2013 because there was no longer a need to offset the HST. These reductions flow directly from the referendum decision made by British Columbians to return to the PST. 2013, the credit amounts were prorated for the year to allow higher basic amounts while HST was still in effect (January March). 2014, the credit amounts were decreased because there is no longer a need to offset the HST. 2013 and 2014 B.C. Basic Tax Credits Credit Base Amount 2013 Base Amount 2014 Indexed Personal Credits Basic Personal Amount $10,276 $9,869 yes Spousal Reduced when spousal income exceeds $8,860 $886 $8,450 $845 yes Eligible Dependant Reduced when dependant income exceeds $8,860 $886 $8,450 $845 yes Infirm Dependant Credit Reduced when dependant income exceeds $4,314 $6,872 $4,318 $6,879 yes In-home Care of Relative Reduced when relatives income exceeds $4,314 $14,600 $4,318 $14,615 yes Age (65 or older by end of tax year) Reduced when income exceeds $4,421
$32,911 $4,426
$32,943 yes Pension Credit $1,000 $1,000 no Adoption Expense Credit (based on federal indexed maximum amount) Actual (to a maximum of $11,669) Actual (to a maximum of $11,774) no Child Fitness Credit The maximum is increased to $1,000 if the child is eligible for Actual (to a maximum of Actual (to a maximum of no 4
the disability tax credit $500 per child) $500 per child) Child Arts Credit The maximum is increased to $1,000 if the child is eligible for the disability tax credit Actual (to a maximum of $500 per child) Actual (to a maximum of $500 per child) no Charitable and Other Gifts Lowest tax rate on first $200; 14.7% tax rate on excess Actual Actual no Medical Expense Credit Reduced by lesser of $2,052 or 3% of net income Actual Actual yes Credit for Mental or Physical Impairment $7,394 $7,402 yes Credit for Mental or Physical Impairment for child under 18 Reduced by attendant care and child care expenses in excess of $4,314
$2,505 $4,318
$2,507 yes Tuition Credit Actual Actual no Education Full-time student Part-time student
$200/month $60/month
$200/month $60/month no Student Loan Interest Actual Actual no EI and CPP Credit Actual Actual no
5
Carry Forward Credits If you were a B.C. resident on December 31, 2013, any unused 2013 tuition or education credits may be used when you calculate your 2014 income tax. If you were not a B.C. resident on December 31, 2013, you can still claim unused 2013 tuition or education credits using the following formula: 2013 Federal Carry Forward x 5.06/15 For example, if you lived in Manitoba on December 31, 2013 but you are now a B.C. resident and you have $1,000 in tuition that you didnt claim in 2013, you calculate the amount you can carry forward to your 2014 income taxes as follows: $1,000 x 5.06 = $5,060 / 15 = $337.33 You can claim $337.33 as a tuition tax credit on your 2014 income taxes.
Transfer of Credits If you are unable to use the age, pension, disability, tuition and education credits, these credits may be transferred to your spouse or common-law partner. You may also transfer tuition and education credits to a parent or grandparent if: You havent transferred the credit to a spouse or common-law partner You have designated your parent or grandparent to receive the tuition-education transfer You havent designated anyone other than the parent or grandparent to receive the tuition-education transfer The disability tax credit may be transferred to a supporting person if the individual doesnt need the credit to reduce his or her B.C. income tax to nil. Special rules apply to the calculation of these amounts if the individual transferring the credit(s) is not a B.C. resident.
Indexed Tax Credits If a credit is indexed that means the credit is adjusted each year by the Consumer Price Index for B.C. (BC CPI) for the 12-month period ended on September 30 of the previous year. The BC CPI used to calculate 2013 amounts was 1.5% and 0.1% for 2014. 6
Dividend Tax Credits Dividends received from taxable Canadian corporations qualify for a B.C. dividend tax credit. The B.C. dividend tax credit rate depends on what year you received the dividend and the type of dividend you received. Starting in 2006, an enhanced tax credit rate is available for eligible dividends. The following table shows the B.C. dividend tax credit rates on taxable amount of dividends by year. Year Tax credit rate on taxable amount of dividends (other than eligible dividends) Tax credit rate on taxable amount of eligible dividends 2014 and subsequent years 2.59% 10% 2012 - 2013 3.4% 10% 2011 3.4% 10.31% 2010 3.4% 10.83% 2009 4.2% 11% 2006 - 2008 5.1% 12% 2002 - 2005 5.1% - 2001 5.9% - 2000 6.6% - Claiming the Credit You claim the credit when you file your T1 Income Tax Return. Complete the Provincial Worksheet and enter the amount you are claiming on the British Columbia Tax form (BC428). For more information on how to report dividends and claim dividend tax credits, see Line 120 of the T1 Income Tax Return guide.
Low Income Climate Action Tax Credit The B.C. low income climate action tax credit helps offset the impact of the carbon taxes paid by low income individuals or families. The low income climate action tax credit is combined with the federal goods and services tax/harmonized sales tax (GST/HST) credit into one quarterly payment. The payments are issued by the Canada Revenue Agency (CRA) four times a year in July, October, January and April, and generally fall on the fifth day of the month. 7
The low income climate action tax credit is a non-taxable payment. This means that you don't need to include it as income when you file your income tax return. You're eligible to claim the credit if you're a resident of B.C. and you: are 19 years of age or older, or have a spouse or common-law partner, or are a parent who resides with your child. Only one person can apply for the credit on behalf of the family. Credit Amounts How much you will receive depends upon the size of your family and your adjusted family net income. The maximum annual payment amount for the period July 2013 to June 2014 is $115.50 for yourself, $115.50 for your spouse or common-law partner, and $34.50 per child ($115.50 for the first child in a single parent family). The credit is reduced by 2% of net family income over the income threshold. The following table shows the income threshold amounts.
Tax Year Payment Dates Net Income Threshold Single Net Income Threshold Married or Single Parent 2013 July 2014 - June 2015 $32,219 $37,589 2012 July 2013 - June 2014 $32,187 $37,552 2011 July 2012 - June 2013 $31,711 $36,997 2010 July 2011 - June 2012 $30,968 $36,130 2009 July 2010 - June 2011 $30,722 $35,843 2008 July 2009 - June 2010 $30,600 $35,700
One-quarter of your annual credit entitlement will be issued to you four times a year. For example, if you are a single individual with no children and an income under $32,187, your quarterly low income climate action tax credit amount will be $28.88 ($115.50/4). Note: To be eligible to receive a quarterly payment, you must be a resident of B.C. on both the first day of that quarter and the first day of the previous quarter. For example, to be eligible for the October payment, you must have been a resident of B.C. on both October 1 and July 1. Claiming the Credit You or your spouse or common-law partner can apply for the low income climate action tax credit when you file your T1 Income Tax Return with the CRA. On page 1 of your return, check the "Yes" box in the GST/HST credit application area. 8
If you have a spouse or common-law partner, be sure to complete the information concerning your spouse or common-law partner in the Identification area on page 1. Include his or her net income, even if it is zero and enter his or her social insurance number. To receive the credit for your children under the age of 18, they must be registered for the Canada Child Tax Benefit (CCTB). If your children are not registered for the CCTB, complete the Canada Child Benefits Application form (RC66). Special Rules Special rules may apply to B.C. personal income tax in cases that involve taxpayers subject to alternative minimum tax, trusts, bankruptcy, residency or income earned outside B.C., part-year residents, non-residents, tax on split income, or taxpayers that die during the year. Alternative Minimum Tax If you are subject to minimum tax under the federal Income Tax Act, you are also subject to B.C. minimum tax. The B.C. minimum tax is calculated as a percentage of your federal minimum tax: Year Percentage of federal minimum tax 2008 - 2013 33.7% 2007 38.0% 2006 39.7% 2005 40.3% 2002 - 2004 37.8% Trusts Special rules apply to how trusts are taxed and how income taxes on trusts are calculated. Learn more about special rules that apply to trusts. Bankruptcy If you declare bankruptcy, you must file more than one return for the year.
Special rules limit the amount of tax credits you may claim for the year. These rules ensure that the total credits cannot exceed the amount that could have been claimed if a single return were filed for the year. Other rules eliminate the carry-forward of credits after the date of bankruptcy. Learn more about special rules that apply to bankruptcy. Residency or Earned Income Outside B.C. Special rules apply if you were a B.C. resident on the last day of the year and you earned income outside B.C., or if you werent a B.C. resident and you earned income in B.C. Learn more about Provincial and Territorial Taxes Multiple Jurisdictions (T2203) 9
Part-Year Residents and Non-Residents Special rules limit the tax credits you may claim if you don't reside in Canada for the entire year. Learn more about special rules that apply to residency status. Tax on Split Income Certain persons younger than 18 must calculate provincial tax on their split income using the highest B.C. tax rate. Learn about tax on split income. Year of Death Special rules limit the tax credits that may be claimed in the year of death. Reporting and Paying Tax You report B.C. income tax to the Canada Revenue Agency (CRA) as part of your federal income tax return. How to File If you were a B.C. resident on the last day of the tax year, or you earned income in B.C. during the year, you may have to pay B.C. income tax.
Forms to calculate your B.C. income tax are included with the federal T1 Income Tax Return. Learn more about filing taxes on the CRA website.
You may have to file an income tax return even if you don't owe any income tax; for example, the CRA may send you a request to file a return.
Even if you don't have to, you may want to file a return if any of the following situations apply: You want to claim a B.C. refundable tax credit (the mining exploration tax credit, seniors home renovation tax credit, sales tax credit, training tax credit or venture capital tax credit) You want to apply for other B.C. financial assistance programs You or your spouse or common-law partner want to receive the B.C. Family Bonus or Canada Child Tax Benefit payments You want to record your mining flow-through share tax credit expenditures for carry- forward or back
Learn more about if you have to file a return. 10
Important Dates Generally, tax returns must be filed on or before April 30. The CRA may charge interest and a late-filing penalty on returns filed after the due date.
If you file your return after April 30, your GST/HST credit, Low Income Climate Action Tax Credit, Canada Child Tax Benefit and Family Bonus, and Old Age Security benefit payments may be delayed.
If you or your spouse or common-law partner carried on a business in the tax year (other than a business whose expenditures are primarily in connection with a tax shelter), your return has to be filed on or before June 15. However, if you have a balance owing, you still have to pay the tax on or before April 30. Learn more about sole proprietorships and partnerships Deceased Persons If youre the legal representative (executor, administrator or liquidator) of the estate of an individual who died during the tax year, you may have to file a return for that individual. B.C. First-Time New Home Buyers' Bonus The B.C. First-Time New Home Buyers Bonus is a one-time payment worth up to $10,000.
B.C. residents who are first-time home buyers and who purchase an eligible new home on or after February 21, 2012 and before April 1, 2013 may be eligible for this bonus. A first-time home buyer is an individual who has never previously owned a primary residence anywhere in the world. A primary residence is generally a house that you own, jointly or otherwise, and that you intend to live in on a permanent basis. You may have more than one place of residence, but you are considered to have only one primary residence. Qualifications You may qualify for the bonus if you meet all of the following criteria: You purchase or build an eligible new home in B.C. You and your spouse or common-law law partner are first-time home buyers In the case of multiple buyers of a home, each buyer is a first-time home buyer You file a 2011 B.C. resident personal income tax return or, if you move to B.C. after December 31, 2011, you file a 2012 B.C. resident personal tax return (you are not eligible for the bonus if you move to B.C. after December 31, 2012) You are eligible for the B.C. HST New Housing Rebate You intend to live in the home as your primary residence No one else has claimed a bonus for the home 11
Eligible New Homes Eligible new homes include: new homes (i.e. newly constructed and substantially renovated homes) that are purchased from a builder owner-built homes A substantially renovated home is one where all, or substantially all, of the interior of the building has been removed or replaced. Generally, 90% or more of the interior must be renovated to qualify. Eligible homes include detached houses, semi-detached houses, duplexes and townhouses, residential condominium units, mobile homes and floating homes, and residential units in a cooperative housing corporation. Newly constructed and substantially renovated homes The bonus is available for newly constructed and substantially renovated homes in B.C. purchased from a builder, where: a written agreement of purchase and sale is entered into on or after February 21, 2012 and before April 1, 2013, HST is payable on the purchase, and ownership or possession of the home is transferred before April 1, 2013. Owner-built homes The bonus is available for new owner-built homes, where: a written agreement of purchase and sale for the land is entered into on or after February 21, 2012, and construction of the home is substantially complete, or the home is occupied, before April 1, 2013. Bonus Calculation The bonus is equal to 5% of the purchase price of the home or, in the case of owner-built homes, 5% of the land and construction costs subject to HST. The maximum bonus is $10,000. The bonus is reduced based on an individuals/couples net income (line 236 of your income tax return) using the following formula. For single individuals, the bonus is reduced by 20 for every dollar in net income over $150,000. The bonus is reduced to zero at $200,000 income. For couples, the bonus is reduced by 10 for every dollar in family net income over $150,000. The bonus is reduced to zero at $250,000 family net income. 12
Claiming the Bonus If you claimed the B.C. HST New Housing Rebate, you can apply for the bonus by completing the Application for the B.C. First-Time New Home Buyers Bonus (FIN 520) (PDF). For assistance, read How to Complete the Application for the B.C. First-Time New Home Buyers Bonus (FIN 520) If you are married or have a common-law spouse, your spouse must complete the Schedule A Certificate B.C. First-Time New Home Buyers Bonus (FIN 520A) (PDF). In the case of multiple buyers of a new home, the other co-owners must also complete the Schedule A. Please note: The person who claimed the B.C. HST New Housing Rebate is the person who must complete the Application for the B.C. First-Time New Home Buyers Bonus. Penalty for False Declaration - make sure that you understand the consequences of making a false declaration. If you knowingly make or participate in making a false statement that results in an excess bonus amount, you may be charged an amount equal todouble the amount of the bonus (the bonus plus a penalty equal to the bonus amount). You must file your application for the bonus on or before March 31, 2015. You will need to provide the following documentation with your application. A copy of your Notice of Assessment of Income Tax for the eligible tax year. A copy of your spouse or common-law partners Notice of Assessment for that year. A complete copy of: o your GST/HST New Housing Rebate Application for Houses Purchased from a Builder (Form GST 190), including the GST 190 British Columbia Rebate Schedule (Form RC7190-BC) or o your GST/HST New Housing Rebate Application for Owner-Built Houses (Form GST 191) including the GST 191 British Columbia Rebate Schedule (Form RC7191-BC). A copy of the final, signed purchase and sale agreement for your eligible new home, and/or the land, mobile home or floating home. A completed and signed Schedule A Certification of B.C. First-Time New Home Buyers Bonus (FIN 520A) for each co-owner and/or your spouse or common-law partner. A completed schedule must be included for your spouse or common-law partner even if he or she is not an owner of the home. For owner-built homes, you must keep receipts for all construction costs. The bonus will be issued after all supporting information is received and your claim has been reviewed. If your claim is adjusted or denied, an explanation will be provided in writing (Notice of Determination). Appeals You have the right to appeal: Denied or reduced bonuses Penalties To appeal, send written notice to the Minister of Finance within 90 days of the date on the Notice of Determination. If sent by mail, the appeal is considered to have been received by 13
the ministry on the day it was mailed. A separate appeal must be filed for each Notice of Determination you are disputing. The appeal must be in writing and sent or faxed to: Minister of Finance Tax Appeals and Litigation Branch PO Box 9629 Stn Prov Govt Victoria BC V8W 9N6 Fax Number: 250-387-5883 Be sure to clearly state the following: Your name, address and telephone number The decision in dispute The reasons for the appeal The facts on which the appeal is based If someone is representing you, or you are representing the taxpayer, a signed Authorization (FIN 87) (PDF) allowing us to discuss the matter with the representative must be provided. Once an appeal is received, the Minister will consider the matter and notify you in writing of the decision. Please note: If youve been charged a penalty or required to repay all or part of the bonus, you have to pay these amounts even while theyre under appeal. You should direct any questions about payment of these amounts to the number listed on your Notice of Determination. Insurance Premium Tax The insurance premium tax applies on contracts of insurance that insure: a person that is a resident of B.C., or a property situated in B.C.
The tax applies differently depending on whether you purchase the insurance from a licensed or unlicensed insurer. Most insurance products sold in B.C. are purchased from licensed insurers. If you purchase insurance from a licensed insurer, the licensed insurer files and pays the insurance premium tax. If you purchase insurance from an unlicensed insurer, you file and pay the insurance premium tax. To find out whether an insurance company is licensed, refer to thelist of authorized insurers maintained by the Financial Institutions Commission (FICOM). If an insurer is not on this list, it is likely an unlicensed insurer. For full details on the insurance premium tax, including what type of insurance is taxable, how to report and pay tax, and the forms and publications, see the information located on our Investing section. Overseas Employment Tax Credit If you claim an overseas employment tax credit (OETC) under the federal Income Tax Act, you may also claim the B.C. overseas employment tax credit (B.C. OETC). 14
As of 2002, the B.C. OETC is equal to the federal OETC multiplied by the ratio of B.C. tax before OETC to federal tax before OETC:
2013-2014 CANADIAN TAX DEADLINES
December 31, 2013 December 31 of the year you turn 71 years of age is the last day you can contribute to your own RRSP January 31, 2014
Due Date for filing and remitting Goods and Service Tax / Harmonized Services Tax (GST/HST) for the prior quarterly reporting period. (Applicable to businesses, not personal tax.)
February 2014
Starting February 2013, you can get a printed copy of the 2013 General income tax and benefit package mailed to you by calling the CRA at 1-800- 959-2221. Between February and early May 2014, the General guide and forms book for your province or territory are available from any postal outlet or Service Canada office near you.
February 10, 2014
The first day for using NETFILE to electronically file your 2012 CRA tax return. For TELEFILE, call 1- 800-959-1110.
March 3, 2013 -RRSP Deadline for contributing to your Registered Retirement Savings Plan (RRSP) for the 2013 tax filing year. March 15, 2014 Quarterly instalment due if you pay taxes to CRA by instalments. April 30, 2014 -Tax Deadline
for personal income tax filing for the 2013 tax year. April 30, 2014
Payment to CRA of your balance owing for 2013 personal income tax is due April 30, 2014 for all personal income tax filers including self-employed.
April 30, 2014 Due Date for filing and remitting Goods and Service Tax / Harmonized Services Tax (GST/HST) for the prior quarterly reporting period. (Applicable to businesses, not personal tax.) 15
CRA tax deadline for self-employed persons to file their personal income tax return. Any balance owing must be paid by April 30, 2014. June 15, 2014 Quarterly instalment due if you pay taxes to CRA by instalments July 31, 2014 Due Date for filing and remitting Goods and Service Tax / Harmonized Services Tax (GST/HST) for the prior quarterly reporting period. (Applicable to businesses, not personal tax.) September 15, 2014
Quarterly instalment due if you pay taxes to CRA by instalments November 30, 2014
Due Date for filing and remitting Goods and Service Tax / Harmonized Services Tax (GST/HST) for the prior quarterly reporting period. (Applicable to businesses, not personal tax.)
December 15, 2014
Quarterly instalment due if you pay taxes to CRA by instalments December 31, 2014 December 31 of the year you turn 71 years of age is the last day you can contribute to your own RRSP. January 16, 2015 Last day for the electronic filing of your 2013 personal income tax and benefit return using NETFILE. Note: While TAXES.CA compiles its list of dates and deadlines from federal and provincial/territorial information and strives to provide accurate information such information is subject to change. Furthermore, this list is not comprehensive. We do not warrant the accuracy of the information and advise all users to consult Canada Revenue Agency, your provincial / territorial government, and/or a taxation professional to confirm all dates and deadlines as they pertain to your personal situation. Additional information on Canada Revenue Agency dates and deadlines can be found at the following: